Gabriel Yiu: What's behind Prime Minister Stephen Harper's lecture at the G20 summit?
At the recent G20 summit, Canada’s prime minister, Stephen Harper, delivered a lecture to leaders of the countries with the largest economies.
Harper urged other prime ministers and presidents to follow Canada’s example and reduce their national debt.
“Lower debt-to-GDP ratios will result in lower taxes for Canadians and a strong investment climate that supports job creation and economic growth across the country," Harper said.
When I heard this news item on the radio, I couldn't believe my ears.
According to government-provided figures, Canada is in a better position compared to other countries, such as Japan and India, in its debt-to-GDP ratio.
For Canada, it's 35 percent, India 66 percent, and Japan 134 percent.
However, if you refer to the same ratio compiled by the International Monetary Fund, which includes provincial debts in its calculation, then India and China are better off than we are: Canada 85.6 percent, India 66.8 percent, and China at 22.8 percent. Japan is far higher at 237.9 percent,
Although skill in governance is a factor, a country's economic model determines the state of the economy.
Conservatives often run deficits
What's the financial record of Stephen Harper's Conservatives?
When the Conservatives became the governing party in 2006, our national debt was $487 billion. The federal government recorded a surplus of $13.8 bilion in that year.
The following year, the federal surplus dropped to $9.6 billion.
The third year, the federal government’s finances ended in a deficit of $5.8 billion.
Since 2008, the federal government’s budgets have all been in the red. In 2009, the Conservatives set a new historic deficit record for Canada at $55.6 billion.
The decade prior to Harper's governance, federal surpluses were recorded every year.
Since the Conservatives formed government, the country has moved from a structural surplus to a structural deficit.
In fiscal matters, there are what are known as cyclical and structural deficits.
The former is related to the economic cycle and a deficit is the result of hitting a low point.
A structural deficit is a permanent phenomenon that exists regardless of the point in the economic cycle; it is due to an underlying imbalance between government revenues and expenditures.
In Canadian history, the largest deficits were all recorded under Conservative governance: $55.6 billion in 2009, $39 billion in 1992, $37.2 billion in 1984, $33.9 billion in 1990, and $33.3 billion in 1985 and 2010.
In terms of national debt, the current figure is $616 billion. That's an addition of $129 billion since Harper became the prime minister, an increase of almost 30 percent.
In 2006, Harper’s finance minister, Jim Flaherty, promised to erase Canada’s debt by 2021 at the latest.
In his 2007 budget, Flaherty declared that by 2012-13, the national debt-to-GDP ratio would be lowered to 25 percent.
The finance minister has since moved back the date of fulfilling the 25 percent debt-to-GDP ratio promise to 2021.
The debt and deficit records clearly show that the Conservatives are indeed not fiscally conservative.
It’s amazing that our prime minister dared make a boast like that on the G20 stage.
Did Harper not worry that his remark would turn him into an international laughingstock?
Harper was speaking to Canadians
Politicians indeed have a thick skin and the risk he took is well rewarded.
That's because the prime minister's G20 address was not meant for the international audience; it was directed at Canadians.
The conveyed message is this: the Conservatives have such a proud record of debt reduction that it shines among the world’s strongest countries.
People would think that the words that our prime minister said on the international stage must be true.
Exploiting the G20 spotlight, Harper wanted to give a marvellous but bogus impression to the Canadian public.
When the media carried the statement without elaboration or critical analysis, the general public would believe that the Conservatives really did a great job on debt and deficit reduction.
In a similar vein, Conservative MPs have often mailed pamphlets with a message saying how they care for and work hard to protect our environment.
I was puzzled in the beginning. Why, among all the issues, do the Conservatives decide to boast about the ones in which they have performed worst?
It’s because nowadays, the performance of a government is often judged more by the perception that is being promoted than the actual record.
When voters are too preoccupied with their work and livelihood and can spare no time to look into the running of the government, then persistent promotion can cover up as well as dress up bad governance.
Will this deceptive practice become the standard practice in our democracy?
Rather than delivering good governance, our politicians exploit every means to deceive the public, and voters just cast their votes based on impressions. This is indeed a trend to be feared.
Gabriel Yiu is a businessman, media commentator, and former provincial NDP candidate.